In a ruling of 4 June 2026 (No. 266.911), the Council of State ruled on whether ‘the organisation of a market consultation with a view to granting a long-term leasehold on the tennis hall in Lanaken’ concerned a mere long-term leasehold or a service concession.
- The facts
The autonomous municipal company of Lanaken (“AGB”) organised a market consultation to grant, according to the “AGB”, a long-term leasehold on a tennis hall. Candidates were assessed based on an action plan, references, a leasehold fee and a business plan. The “AGB” also stipulated, among other things, that the principal use had to remain tennis and padel and that, once the long-term leasehold had been concluded, it would no longer bear any costs.
The company to which the long-term leasehold right was not granted argued that the “AGB” had incorrectly classified the real estate transaction. It believed it was not a long-term leasehold but a service concession. Quid?
2. What does the law say?
The Concessions Act defines a service concession as ‘a written contract in return for payment by means of which one or more contracting authorities entrust the provision and the management of services (…) to one or more entrepreneurs, the consideration for which consists either solely in the right to operate the services that are the subject of the contract or in that right together with payment’ (Article 2, 7°, first paragraph, b))
It is apparent from the parliamentary preparation and Directive 2014/23/EU, which the Concessions Act transposes, that concessions concern services, the performance of which is subject to specific requirements defined by the public authority, which are legally enforceable (recital 14 of Directive 2014/23/EU).
At the same time, the Directive makes it clear that there is no concession where a public authority merely establishes general conditions for the use of an asset. According to the European legislator, this is generally the case, for example, with public domain or land lease contracts (recital 15 of Directive 2014/23/EU).
Therefore, not every transaction in which a public authority grants an entrepreneur a right to use or operate an asset is subject to the rules on concessions. The decisive factor is whether the public authority merely establishes general conditions for the use of the asset concerned or instead imposes specific, defined and legally enforceable requirements.
3. What does the Council of State say?
The Council of State agrees with this.
First, it reiterated the fact that the agreement is described as a ‘long-term leasehold’ is not decisive. Its classification must be determined on the basis of the actual substance of the transaction.
The Council further stated that the distinction between a real estate transaction and a service concession depends on whether the arrangement is primarily concerned with having services performed in accordance with requirements imposed by a public authority and where it can require or enforce the performance thereof.
Based on the documents at hand (no long-term leasehold agreement had yet been drawn up) the Council of State found that this was not the case.
The market consultation documents did not show that the “AGB” of Lanaken imposed (or intended to impose) standards relating to the operation of the tennis hall, other than requiring the premises to be used primarily for tennis and padel. However, the Council considered this insufficient to conclude that it concerned a concession. After all, parties to a long-term leasehold may also contractually impose restrictions on the permitted use of an asset.
The same applied to the assessment criteria. The fact that candidates were assessed based on references, an action plan and a business plan did not turn the transaction into a concession. Those assessment criteria were not linked to any specific requirements or enforceable obligations concerning the performance of services or works. According to the Council, a public authority may also use such criteria when granting a right in rem to assess the quality of a candidate’s application.
Finally, according to the Council, the contractual provisions of the market consultation file which describes the basic principles for the long-term leasehold agreement consisted mainly of general clauses. For example, there were no requirements regarding the rates to be charged, access for residents of the municipality or opening hours. Nor was there any specific monitoring or penalty mechanism in respect of the operator.
Since the applicant had therefore failed to establish that the real estate arrangement was primarily concerned with having services performed in accordance with requirements laid down by the “AGB” of Lanaken, the performance of which it could require or enforce, the Council of State believed the arrangement did not constitute a service concession.
4. Take-away
The mere fact that a private party will operate public infrastructure, bear the economic risk or be assessed based on qualitative criteria is not, in itself, sufficient to say it is a service concession. The key question is whether a public authority imposes specific, concrete and legally enforceable service obligations or merely lays down general conditions for the use of the asset.
The more a public authority determines how an asset is to be operated in terms of content, monitors it and makes it contractually enforceable, the greater the risk that what appears to be a ‘real estate transaction’ will be regarded as a service concession. Local authorities and autonomous municipal companies bringing sports halls, recreational infrastructure, hospitality premises or other public sites to the market would therefore be well advised to bear this distinction in mind.
Questions about the classification of a real estate transaction? Please feel free to contact our public procurement team.